Case Study: Legacy Health Care
Situation: 440-bed skilled nursing facility with debt of $22MM, losses of $4MM annually and poor management controls. Real property overleveraged given values in the area.
- Bank relationship broken
- Finance/business office in state of disarray
- Poor site management
- Cost structure changes required
- Company seeking to file Chapter 11 in order to reorganize to better service debt and inject working capital
Solutions:
- Kevin Lombardo brought on as CRO
- Led filing of Chapter 11
- Negotiated DIP financing
- Restructured business operations:
- Replaced all Administrators
- Replaced CFO
- Replaced Business Office Director
- Reduced staffing
- Implemented shared services group for all homes
- Strengthened sales and marketing team
- Developed and negotiated Plan of Reorganization with 2 creditor committees, banks and NY State
- Secured exit financing
Results:
- Successful emergence from Chapter 11
- Exit financing secured on property and business
- Plan adopted for payment of 50 cents over 5 years
- Revenues increased 8% during Chapter 11
- Business generates $2.5MM in cash flow per year
- Rebasing completed resulting in retro check of $1MM